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| The business of H'wood is changing |
Hmmm..... so what does the U.S. based Motion Picture Association of America do? It pivots and gives a BIG HO-RAH to Netflix and other streaming services, including home entertainment spending in its annual report on the health of the movie business.
There is good reason for the pivot, considering the explosion in digital subscription services vs. the volatile cinema market and the death of DVD sales/rentals (once the major contribution to Hollywood's coffers). In 2017, global spending on cinema and home entertainment totaled $88.4b with home entertainment responsible for $48.4b of which $32.1b was digital content streaming.
The MPAA is comprised of the six major studios: Disney, Fox, Paramount, Sony, Universal, and Warners all of which sell their movies to streaming services; however, they have a conflicted relationship with Netflix, which also produces original content for movies and TV productions - which will exceed $8b this year. Netflix has also irked movie exhibitors by refusing to abide by the theatrical window in trying to screen its original films at theaters - as they do at the iPic Cinemas.
The demographics of films is also changing, making traditional films (particularly non-blockbusters) irrelevant. The 25-39 age group continued to have the most frequent moviegoers followed by the 40-49 age group. Next came the 12-17 group followed by the 18-24 group. The worst stat in these numbers was that the 18-24 group's attendance was down 28% while the 12-17 group was down 22% from 2016 - not a good sign for the future.
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| Chuck Dodd out Charlie Rivkin in as MPAA hancho |
Among ethnic groups, Hispanics were the highest, going to the movies 4.5x on average per year, followed by Asians at 4.3x. Caucasians purchased 55% of all tickets sold, Hispanics 23%, Blacks 12%, and Asians 7% - these stats pretty much mirror the population figures of these groups.
More than 263 million N. Americans went to the cinema at least once in 2017, with ticket sales essentially split evenly between female and male moviegoers.
RECAP
- Less people (particularly the younger age groups) are going to the movies.
- Higher ticket pricing is making up for the slide in admissions - (sustainable?).
- Lots more is being spent on streaming content vs. cinema viewing
- The trend in home entertainment is: a lot more quality content will be available.
My take is that cinemas must embrace the Netflix's of the world and began to strike deals with them to screen their content as well as Hollywood's output. The studios are already doing it - why not cinemas?
Stay in touch,
Jim Lavorato
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